Wealth management with a digital touch that is surprisingly human

Wealth management is in the grip of a digital revolution. The sun is setting on the days when a private banker and client met once a quarter in a discreet club room for an amiable chat about portfolio options.

Today, high net worth individuals conduct 44% of their wealth management interactions online and that figure climbs to 48% for clients worth US$20 million or more, according to research by FactSet, a digital solutions market leader. Asian investors take the lead here with over 50% of interactions conducted online versus their European and North American peers.

This evolution means that, to meet the needs of their increasingly tech-savvy clients, private banks must turn to digital solutions or face losing a new generation of clients to competitors that recognise the future of wealth management.

Changing Mindsets
Many private bankers are reluctant to react to the digital revolution. They are missing a huge opportunity, according to Philipp Zerhusen, Director of Market Developments for FactSet Digital Solutions.

“Whenever you touch the holy grail of private banking involving high net worth and ultra high net worth clients, the private banker and the head of department are usually very reserved and averse to the new technology,” Zerhusen said.

“They say their clients always prefer this very personal approach, but I seriously think that premium end clients want at least the same digital service as any high street customer with a good online client service.”

This reticence brings with it the risk of undermining long-standing client relationships.
“High net worth clients can afford all the latest technological tools, so if you as the private bank do not create such a service, someone else will,” he added.

Human Programming
Paradoxically, the introduction of technology has the potential to enhance—not diminish—client relations.

Digital options actually increase client contact, with one major study finding that the introduction of online wealth management channels drastically raises the level of interaction between banker and client, from five-10 times a year to 150-250 times.

The application of Artificial Intelligence (AI) into digital systems allows wealth management systems to be highly personalised and to react instantly to sectors and trends that match an individual client’s interests and goals.

“The fear that private banks are going to lose client contact is misplaced – it is actually the reverse,” Zerhusen explained. “It is a question of whether wealth managers are ready for that tsunami of client interactions.”

Intelligent Advances
The possibilities for personalisation are almost limitless. Private banks can potentially offer as many individual investment strategies as they have clients, says Zerhusen.

“Technology and AI are at an advanced enough state to be utilised in compelling solutions, which will provide better and more personalised investment advice than ever before,” he said.

In a rapidly-changing digital environment, the time for private banks to embrace change is now.

“Technological progress is exponential,” said Zerhusen. “Once it breaks the surface and becomes visible, it is almost too late to catch up.”

For more FactSet thought leadership for wealth managers, download our latest eBook: “The Resilience Agenda – The Wealth Manager’s Guide to the New Era of Volatility”

FactSet has more than 9,000 employees and is the leading provider for professional Asset and Wealth Management. FactSet Digital provides cutting-edge digital solutions for the financial industry.

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